Record rains dampen crops in US midwest
12 June 2008 22:08 [Source: ICIS news]
By David Rosen
HOUSTON (ICIS news)--Record flooding in the US corn belt battered infrastructure and threatened crops on Thursday, with potentially drastic consequences for food and fertilizer markets.
“Obviously the crops are in trouble, with all the rains we’ve had,” said Henry Merschman of Merschman Fertilizers, a retailer in West Point, Iowa. “I honestly think, and I’m starting to see it in the markets, that we probably should be buying some corn futures.”
Merschman said he drove across Iowa to get out of state for golf this past weekend and saw a “lot of ponds”.
“I think they’re going to have a heck of a time in the midwest,” said a fertilizer producer. “There’s an awful lot of ammonia on the ground, and they’re going to need a lot more.”
Heavy rains have plagued the corn belt earlier this year and slowed down planting. While some market sources say this may create an upside for ammonia and nitrogen demand later in the year, the flooding makes it unreasonable for farmers to re-apply ammonia or side dress their crops until drier conditions prevail.
“Indiana’s flooded, Wisconsin is flooded, Iowa is flooded - I would imagine there’s going to be a lot of replanting,” an ammonia trader said.
In the meantime, a 250 mile (402 km) section of the Mississippi River between Hannibal, Missouri, and Muscatine, Illinois, was forced closed by high flood waters.
The woes of farmers come at a time when a global food shortage has placed a premium on many crops. Fertilizer companies, meanwhile, have seen their market capitalisations increase drastically over the past year.
Some of the biggest fertilizer companies that work with ammonia in North America include Terra Industries, CF Industries, Agrium, PotashCorp, Mosaic and Yara.
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